After almost thirteen years of marriage, Charlie and I hit a milestone that we have been working towards all this time.  We are officially Debt Free!!!  Charlie had the steady decent pay job to give us the money to be sensible with and I had some mortgage/loan background and understanding of interest loans.  I started tightening down our belt years ago with Charlie’s extra income and wiped out thousands of pounds and dollars of debt on both sides of the pond.  This is us now debt free on BOTH sides of the Pond!!  WOW and DOUBLE WOW!!!

What does this mean to the ranch?  We did build a 3 stall pole barn just for sheltering our 1960 Serro Scotty Vintage Trailer, our horse trailer and one of the vintage VW bugs this fall.  Next year, we will build a large all purpose barn that will not only become the main barn for hay and animals but also include a couple of semi finished rooms for Charlie.  He will have his wood working studio so he can take his father’s Scottish lathe out of storage and start turning wood.  He will have another room that is his studio for oil painting and drying all his finished wood work creations.  Yeah for Charlie!!

Once that barn is built, the current barn and cabin will start to come down as the following Spring we will start our house build.  Building our house has been a long time coming and our original plans did NOT work out.  Having to wait for it, we did realize that the original couple of locations for the house were not THE spot for us and where our current barn is now is where the house will be in the future.  It is the most sheltered spot on the ranch from all the harsh weather we get as well as has wonderful views.  And being close to the animals for the last few years drove home that I don’t want to be a quarter mile away from them in the future.

We are NOT going to do a construction loan!!!  oh no siree!!  We have our well, septic, driveway, barns, electric, phone…..all paid for by us with cash as we had the money.  The first few years on the ranch I hauled water in a large cistern on the back of our old F150, Henrietta, Ford Truck.  I even hauled water for a year or so in 5 gallon buckets from town.  It’s a total 50 mile trip for water.  It is good to have a well and even better to know that if there was ever a problem, I could haul water from town and we would survive.  I did it before and I can do it again.

When we wanted to build in the beginning, the banks refused to give us a construction loan.  Their reasoning was that even though my credit score is in the 800’s and Charlie has a stable long term good paying job, he is a Scot.  He did not have a social security card or a green card.  The banks refused to finance us without those two cards even though we could prove his income and long term employment.  Several years after moving from Scotland to Colorado, we did apply for his green card.  Eighteen months  and about $5000 later, we had his green card.  He had a social security card a year or two before the green card.  We have the necessary documents now to please the banks.

Thing is: it does NOT please us to have the bank’s money!!  They can go jump in the lake for all we care.  When we needed a loan and could afford it, they refused.  We don’t need them now.  We were an excellent credit risk and they lost our business.  Our house will be built in a couple of years once we save up the money to build it.  Plain and simple.  Take that you evil banking institution!!

Retirement is a function of INCOME not age!!  Once the house is built, the next step in our master plan is to put away enough money into investments and bank that we can live off the interest all year long and never touch the principal.  Once that is done, Charlie retires and plays on the mountain.  He originally set his retirement age as 50 when he was only 20 years old and started off working in the offshore industry.  The world has changed greatly since that day long ago, so we feel that 57-58 is a good compromise and goal.

Taking responsibility and action for fiscal independence years ago was NOT a popular thinking pattern.  Had we not done that than, we would have gone belly up by the time the rest of the world did.  All those that made fun at that time are still up to their necks in hock and we are not.  Guess maybe they should have listened.  How did we do it?

1.  Round monthly payment amounts up to a whole amount and pay that every month all the time.  An example is a car loan that is say $276.42.  Round it up to $300.00 and pay that every month.  Get it set in your mind that car payment is $300, not that other amount.

2. Close all your credit cards so you can not increase the balance and pay the balance off.  Pay a little extra on it EVERY MONTH over the minimum.  Round the amount up to something you can handle and think of that bill as ONLY that amount due even as the minimum amount continues to drop.  You can still have the convenience of a plastic card, but it needs to be a debit card off your bank account and you need to spend within your means.

3. Do not take out new debt.  If you have to, make certain the interest rate is low and you can handle to pay extra on the payment every month from the start.

4. Cut down on the fun stuff that you waste money on all the time.  Buy a nice water bottle and carry water with you from your home whenever you leave.  Do not buy designer water for all that money.  Do not buy Bottled water.  Do not buy Sports Drinks.  Besides most of them not being very healthy for you to start with, they are so over priced that it is ridiculous.

5. Do not buy pop in the drive through.  I only buy a drink during happy hour at Sonic for half price.  I rarely EVER buy any drink at any drive through any other time as they are over priced and usually bad for your health to start with.

6. Pay extra and round up the mortgage amount for your monthly payment.  I am not saying to pay a lot extra.  A few dollars here and there on a consistent basis will reduce the life of your mortgage greatly.  When I worked in the mortgage industry, I advised clients that if they could make at least ONE PRINCIPAL payment extra per year on a 30 year mortgage, it would wipe out over 5+ years off the life of that loan.  And that is a huge savings in interest as well.  Most people do not understand compound interest.

7.  Anything extra that you work into your budget to pay on a monthly basis will get you just that much closer to your end goal of being debt free.  It is important to figure that into your bills and think of those bill amounts due as the higher amount.  If you wait until the end of the month to see WHAT is left over, you will whittle it away and waste it all month long and never make progress.  There will NEVER be anything left over.

8.  Very important to think about and be strategic with is which bills you pay off first.  Whenever you have a windfall of extra money or pay off a bill and have a budget amount to apply elsewhere, it is best to apply it to the loan or credit card with the highest interest rate.  That interest that you pay out on a monthly basis is money you just threw in the toilet.  You gain nothing by paying interest.  Paying off the highest interest rate is almost always the best option but there may be a time when it is more prudent for your personal situation to pay off a lower interest rate.  In one of those situations, it may be a loan or card with a lower interest rate but a very low balance.  You would have a bit extra and could pay it off and free up a LARGER FIXED monthly payment that could be applied to the higher rate loan or card.  It isn’t always black and white, you do have to look at your finances and put your extra money no matter how small of an amount where it will work best for you.

Charlie used to occasionally ask me how he could have such a good paycheck and never have any money to rub together in his pocket.  I would remind him of the thousands of pounds/dollars of debt that we had paid off.  He was many times focused on the tree in front of him and unable to step back and see the forest.  I could see the forest and sometimes didn’t see the immediate need for extras.  We worked well as a team in this aspect talking about each bigger purchase and making sure we were both in agreement to go ahead.  Did he complain and get mad sometimes..oh yes!  sometimes loudly.  Did I listen?  yes and than I ignored him and continued penny pinching.  He wanted the same thing as I did which was to be debt free and have our house built and him to retire early.  He had the job providing the income. I had the resolve to force us both to pay extra on everything constantly and consistently in small amounts over a longer period.  Slow and Steady!!  In order to make that, you have to sacrifice.  I don’t think that either of us could have done this on our own.  We needed the combination of his money, my resolve and banking knowledge, and our commitment and combined team work.

We had set backs on the way.  We made stupid impulse buys on occasion that cost us more money.  (Like the 1986 Jaguar XJS that I bought for him as a surprise without talking to him first that turned out to be a money pit and cost us a serious set back.  Yup, we were not prefect.) But we did NOT give up.  That is the key.  Keep paying extra, keep your focus, and over time you will pay things off.  Once you pay off one monthly bill, take that amount and immediately apply it to another bill.  You may end up doubling your credit card payment in a month, but do not fall into the trap of spending that freed up money.  You have been used to paying it to bills, so keep paying it to another bill.  It isn’t a case of thinking that bill is paid, now I have spending money.  Until you are debt free, spending money is only an illusion that slows you down to your goal.

You CAN spend money on things you don’t need, but you need to think about it and decide if it is worth delaying your long term goal for that immediate gratification.  This requires a change in your thinking more to what your grandparents or great grand parents may have thought.  You buy things once you have the money saved up to do it, NOT BEFORE on credit.  Sometimes it is prudent to buy on credit if you are trying to create a credit history.  We do that on occasion knowing full well we could either buy it outright or we might have most of the money to buy outright so we know that loan will be paid off WAY before it is due.

Slow and Steady.  Paying extra all the time.  Consistency and determination….Using these it will snowball and you will pay things off fast.  That is how we did it.  You can too.